What is the Baltic Dry Index, and what does it mean to the economy? Here is a good definition from Wikinvest.com:
The BDI is one of the purest leading indicators of economic activity. It measures the demand to move raw materials and precursors to production, as well as the supply of ships available to move this cargo. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it.
This is a pretty important indicator, since it is forward-looking. In other words, companies plan what they will need, and book the ships to deliver the purchased goods. If they do not have anything to produce, they do not book the ships.
Take a look at the following video and judge for yourselves if we should be concerned. I don’t know about you, but I will be stocking up on as many things as I can. Here are some suggestions:
1. Start growing some food and learn how to can and dry it. It is not difficult. If a dummy like me can do it, you can too! I dry veggies by laying them on a rack on my counter under the ceiling fan.
2. Start collecting extras of things that you use every day. If you normally buy one toothbrush, get two or three – and don’t forget the toilet paper!
3. Get some good rodent-proof containers and store extra grain, flour, dried fruits and veggies, jerky, and other foodstuffs.
This list is by no means comprehensive, and is only meant to get the ball rolling. Make a list of things you use a lot of and stock up! If the Baltic Dry Index, or BDI, is our best economic indicator, then we are in for hard times ahead! Here is the video from The Green Dragon:
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